Increasing costs a risk for Paris 2024 Olympics

Increasing costs a risk for Paris 2024 Olympics- InsideSport

Paris merely a few hours before being officially stamped as the 2024 Olympics host city, is faced with one of the biggest challenges to keep quadrennial mega show within budget.

Paris has set a modest Euro 6.6 billion ($ 7.9 billion) budged for the 2024 Games.

The actual expenses to host the Summer Games have all gone past the double the budgetary provisions kept for the 2012 London, 2004 Athens and 2010 Sydney Games.

At the 2008 Beijing the final bill had reached an enormous Euros 32 billion, which was more than ten times the original budget. Vladimir Andreff, a sports economist at Paris’ Sorbonne university, described Olympic budget inflation as “the curse of winning an auction”.

“In theory, the winner of an auction is the most optimistic participant and the one prepared to outbid everyone else,” said Andreff, one of three experts who contributed to a financial impact study commissioned by the Paris bid team. “And when there are a lot of competing cities, the winner is trapped,” reports AFP.

In an attempt to impress the International Olympic Committee in the bidding process, candidate cities underestimate certain costs – as London did for the 2012 security bill – and overestimate potential economic benefits.

After evaluating the Paris bid in July, the IOC said in its report that while costs for security, preparing venues and installing temporary infrastructure “may be understated”, they “could be offset by potential expenditure reductions in other areas”.

However, Jean-Pascal Gayant, economics professor at Le Mans University, is skeptical. “I find it very hard to imagine that the bill for 2024 will be below that for Athens and London,” he said.

The official cost of the London Games rose to pound 8.77 from an initial bid estimate of around half that figure. Andreff, the Sorbonne economist, estimates the actual bill for London was almost euros 10.9 billion.

The spiralling cost of organising an Olympics was the main argument put forward by opponents of the French capital hosting the Games for the first time since 1924.

But the Paris bid team has repeatedly insisted that its euro 6.6 billion estimate is feasible.

Bernard Lapasset, the co-head of the organising committee, said the bid was “sheltered” from changes to financial conditions in the future because 95 per cent of the venues already exist.

The organising committee budget is basically financed by the Olympics themselves – the estimated euro 3.37 billion cost will be paid for with the IOC’s contribution of euro 1.45 billion euros and income from sponsorship and ticket sales.

Paris is planning to use the Stade de France, built for the 1998 World Cup, as the main Olympic Stadium, whereas London and Athens both had to build stadiums.

Paris only has to construct three sites — the athletes’ village, which at euro 1.3 billion is by far its most expensive item, a media centre and an aquatics centre.

The total bill for permanent venues is estimated at three billion euros, of which the French State and local authorities will pay half, while the other half will come from private investment – the athletes’ village will be partly privately financed.

One concern for Paris is that its bid was based on the sports in the 2016 Rio Olympics. Since then, surfing, climbing, softball/baseball, karate and skateboarding have been added to the Olympic programme, meaning they might require the construction of venues not currently in the bid estimate.

But the biggest headache for host cities remains the cost of transport infrastructure to bring hundreds of thousands of spectators to events. “In the past, the big cost increases came from non-sporting infrastructure. That was certainly the case for Athens and Barcelona (which hosted the 1992 Olympics),” Andreff said. He warned it would be an expensive mistake to use the 2024 Games to try to accelerate a long-term project already under way to improve transport networks in the Paris area.

“When you speed up investments, they cost more,” he said.

Meanwhile, Los Angeles has received its formal go-ahead to host the 2028 Olympics, getting a thumbs-up from the International Olympic Committee’s evaluation commission.

The full IOCBSE is scheduled to award the 2024 Games to Paris and the 2028 Games to Los Angeles on Wednesday.

Los Angeles had originally bid for 2024, but because of the new date, it had to make changes to its host contract. The evaluation commission signed off on those, saying that although details need to be finalised, it is confident LA can host in 2028.

Los Angeles received concessions for agreeing to host four years later. Considerations include receiving a portion of the IOC’s surplus from the Olympics to fund youth sports programs in the city.

Los Angeles will also receive up to US$ 2 billion from the IOC, which is up to USD 300 million more than it would have gotten for 2024.

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